Are you considering a real estate investment trust (REIT) as part of your portfolio?
Then you’ve come to the right place.
What makes REITs attractive is that they offer investors a way to diversify their investments without purchasing and managing physical properties themselves.
One type of REIT gaining popularity with investors is data centre REITs in Singapore.
Data centre REITs provide renters with dedicated servers and cloud space in a secure environment, allowing them to keep their information safe while staying connected.
There are several data centre REITs in Singapore, but which is the best?
In this article, I’ll describe the best data centre REITs for investors and discuss their advantages over traditional real estate investing.
What are data centres?
Data centres are large-scale IT infrastructure facilities that store, share, process and manage data.
Organisations use them to provide colocation services (houses physical servers), cloud computing services, managed hosting, and other related products and services.
They are used to store, protect and manage large amounts of digital content.
Generally speaking, data centres store, manage, protect, and process digital information.
Imagine this, every time you send a message on Telegram, open an email, or even read our blog, the data centre will store that information.
With more and more companies digitising and digitalising, more data centres are needed to store and process these data.
Why data centre REITs?
Data centre REITs provide investors with a way to invest in the booming data centre industry without buying or building their own physical assets.
Data centre REITs often generate steady cash flows and are considered a safer and more profitable option for investors looking for reliable returns.
With data centres becoming the go-to facilities for storing and processing growing amounts of big data, investing in a well-managed data centre REIT is likely to pay off for those looking for profits.
Moreover, data centres can also be attractive investments as they are resistant to economic downturns since most companies still require services provided by them, even when spending budgets are tight.
Finally, investing in these types of entities also opens up new opportunities to diversify an investor’s portfolio outside of traditional real estate investments and into something more high-tech.
Best data centre REITs in Singapore
- Keppel DC REIT (SGX:AJBU)
- Mapletree Industrial Trust (SGX:ME8U)
- CapitaLand Ascendas REIT (SGX:A17U)
- CapitaLand China Trust REIT (SGX:AU8U)
|Stock||Ticker||Current Share Price
|Dividend Yield||P/E Ratio|
|KEPPEL DC REIT
|SGX: AJBU||1.77||3.04 Billion||5.33%||9.44|
|Mapletree Industrial Trust||SGX: ME8U||2.21||6.02 Billion||5.03%||13.60|
|CapitaLand Ascendas REIT||SGX: A17U||2.74||11.48 Billion||4.97%||11.47|
|CapitaLand China Trust REIT||SGX: AU8U||1.12||1.87 Billion||7.68%||16.85|
- The Straits Times Index (STI) is a capitalisation-weighted measurement index for the stock market that acts as a benchmark for Singapore’s stock market. Essentially, it tracks the top 30 companies whose stocks are listed in the SGX.
- Chart sources from Yahoo Finance
- Accurate as of 31 December 2022
1. Keppel DC REIT (SGX:AJBU)
Keppel DC REIT is a real estate investment trust that invests in data centres and other real estate assets supporting the digital economy.
Data centres are popular investment vehicles because they have a high occupancy rate, and their demand is high from firms needing to store and manage data.
Keppel DC REIT is an example of a Data Center REIT listed in Singapore’s Exchange. Its portfolio comprises a diversified mix of real estate markets in various markets around the world.
The Keppel DC REIT has seen an upward trend in its share price over the last 5 years, except for a decline in 2022. The rising inflation and high-interest rates may have influenced this drop in the share price.
|–||STI Benchmark||KEPPEL DC REIT||Difference|
The KEPPEL DC REIT is trading at S$1.77 to deliver a market capitalisation of $3.04 billion. The price has moved by -27.76% over the last year. Regarding relative price strength, the REIT has underperformed the STI by -36.705%.
For 5 years, the share price has outperformed the STI by 21.934%. Generally, REITs performed poorly in 2022 due to high inflation and rising interest rates (like everything else).
The REIT falls under the Neutral classification, and the overall recommendation is a BUY.
Typically, Data centre REITs are resilient, and REITs owning data centres have a good history of providing great results to investors.
The dividend yield for the Keppel DC REIT for the trailing twelve months is 5.33%.
In the previous year, the REIT paid a dividend of S$0.09. However, there’s no information on the next dividend payout date.
The Keppel DC REIT has a price-to-earnings (P/E) ratio of 9.44 based on its reported earnings over the past 12 months.
Keppel DC REIT released its Q4 earnings results whereby gross revenue climbed by 1.4% to S$70.3 million.
Investments, asset enhancement initiatives, and acquisitions drove the revenue increase.
In December 2021, the trust acquired China’s Guangdong Data Centre 1 and other data centres. Currently, Keppel DC REIT has 23 data centres across 9 countries.
Having a diverse portfolio of assets in various locations can help to spread out the risk and provide a stable source of income for the REIT.
A significant portion of the gross revenue for REIT comes from countries outside Singapore because nearly half of its investment portfolio is located outside of Singapore.
To mitigate foreign currency risks, the REIT has implemented natural hedging by borrowing in currencies that correspond with its investments.
2. Mapletree Industrial Trust REIT (SGX:ME8U)
Mapletree Industrial Trust (MIT) is a Singapore-based trust that invests in and manages industrial real estate across Asia.
The Mapletree Industrial Trust REIT invests in a diversified portfolio of industrial properties such as warehouses, distribution centres, light industrial buildings, and high-tech business parks.
The trust seeks to provide unitholders with regular distributions through the ownership of income-producing real estate.
MIT has a strong track record of delivering stable returns and long-term capital appreciation for investors.
Mapletree Investment Pte Ltd, an established real estate fund manager in Asia Pacific since 2000, manages the trust.
It’s common for a company’s share price or real estate investment trust (REIT) to fluctuate over time, and various factors can impact the share price.
In the case of Mapletree Industrial Trust REIT, the share price has generally been rising steadily, except for a dip in 2020 due to the COVID-19 pandemic.
The pandemic had a negative impact on the global economy and many businesses, which could have contributed to the decline in the share price of the REIT.
Additionally, the share price may have been affected by other factors, such as changes in the overall market conditions, the performance of the REIT compared to its peers, and any news or events that may have impacted investor sentiment.
In 2021, there appears to have been a decline in the share price, which similar factors could have influenced.
It’s important to note that various factors can influence a company’s share price or REIT, and past performance is not necessarily indicative of future performance.
|–||STI Benchmark||Mapletree Industrial Trust REIT||Difference|
Currently, Mapletree Industrial Trust shares are trading at S$2.22 to deliver a market capitalisation of S$6.02 billion, which indicates that the company has a significant size and market presence.
It’s important to note that a company’s market capitalisation can fluctuate over time based on various factors, such as changes in its financial performance, market conditions, and investor sentiment.
The stock price has moved by -18.45% over the last year and underperformed the STI by -27.395%.
In terms of relative price strength, the share price has outperformed the STI by 3.534% over 5 years.
The share falls under the Neutral classification, and the overall consensus recommendation is Hold.
In addition, the REIT’s dividend yield is 5.55% based on a 12-month trailing period.
In the previous year, Mapletree Industrial Trust REIT paid a total dividend of S$0.112; however, there’s no information on the next dividend payout rate.
The P/E ratio based on its reported earnings over the last year is 13.60.
The future outlook is optimistic because the year-on-year gross revenue grew by 12.8% thanks to the revenues from the 29 new data centres acquired by the company.
Its portfolio shows that MIT has up to 141 properties in the U.S. and Singapore, with a high occupancy rate of 94% and 96.8%, respectively.
There’s also a diversified tenant base which is a positive aspect for the Mapletree Industrial REIT. Worth noting a diversified tenant base can also provide a stable source of income for the REIT and contribute to an increase in gross rental income.
However, the REIT needs to manage its operating costs effectively to maximise its net revenue. Its expenses grew by 28.2% year-on-year.
If it can mitigate these costs, it can improve its net revenue and enjoy better growth.
3. CapitaLand Ascendas REIT (SGX:A17U)
CapitaLand Ascendas REIT is Singapore’s first and largest listed business space and industrial real estate investment trust.
The REIT has an extensive portfolio of quality assets in key strategic locations across Asia Pacific, Europe, the US, and the UK.
With over 200 prime properties under management, CapitaLand Ascendas offers its investors a truly global platform for long-term capital appreciation and steady dividends from rental income.
Investing in this REIT allows you to access a diversified portfolio of prime commercial buildings worldwide with strong occupancy levels, consistent rental in-flows, and attractive returns.
Except for the COVID-19 pandemic in 2020, the shares have performed well over the past 5 years. Also, in 2022 there was a slight fluctuation due to high inflation.
|–||STI Benchmark||CapitaLand Ascendas REIT||Difference|
CapitaLand Ascendas REIT shares are trading at S$2.74 to deliver a market capitalisation of S$11.48 billion.
The REIT has a trailing 12-month dividend yield of 4.97% and paid a total dividend of S$0.41. The P/E ratio based on 12-month earnings is 11.47.
The stock price has moved by -7.77% over the last year and underperformed the STI by -16.715%.
In terms of relative price strength, the share price has underperformed the STI by -3.076% over 5 years.
The shares fall under the Neutral category; analysts recommend a HOLD overall.
The shares have a positive outlook because the firm’s assets are logistical spaces, industrial properties, data centres, and high-tech business parks with exposure to wide market segments and enormous growth opportunities.
The impact of high-interest rates has weighed heavily on REITs, and CapitaLand Ascendas REIT is no exception.
However, during the year, the REIT took bigger steps in managing high-financing loans by hedging up to 78% of its debt to fixed rates.
The portfolio occupancy of this REIT has remained high at 94.50% by 30th September 2022.
Also, the REIT has acquired a cold storage logistic property in Singapore with high-profile tenants.
This could be a lucrative opportunity for the CapitaLand Ascendas REIT as it may attract customers looking for storage solutions and generate revenue through rental income.
4. CapitaLand China Trust REIT (SGX:AU8U)
The CapitaLand China Trust REIT seeks to provide unitholders with regular and stable distributions and long-term growth by investing in a portfolio of income-producing real estate used primarily for retail and office purposes in China.
It’s worth noting that this is not a pure data centre REIT. Their recent expansion in data centres, business parks, and logistics centres is the reason why I put the CapitaLand China Trust REIT in this post.
The trust also exposes investors to the Chinese REIT sector, allowing you to benefit from the potential appreciation of rental rates and capital values of properties under its management.
Investing in CapitaLand China Trust REIT may offer you an opportunity to diversify your portfolios while providing potential capital gains.
Looking at the 5-year price movement, we can see a stable performance except in 2020, when prices dipped due to COVID-19.
|–||STI Benchmark||CapitaLand China Trust REIT||Difference|
CapitaLand China Trust REIT shares are currently trading at S$1.12 to deliver a market capitalisation of S$1.87 billion.
The REIT has a trailing 12-month dividend yield of 7.68% and paid a total dividend of S$0.09. The P/E ratio based on 12-month earnings is 16.85.
The stock price has moved by -5.88% over the last year and underperformed the STI by -14.825%.
When comparing the company’s stock price to the STI, it has underperformed the index by -34.426% over 5 years.
This means that the company’s stock price has not performed as well as the overall market, as represented by the STI.
However, revenue is increasing – which is a good indicator of growth.
Furthermore, the CapitaLand China Trust REIT is managed by CapitaLand China Trust Management Limited, owned by CapitaLand Limited – one of the largest real estate companies in Asia.
Notably, past performance is not necessarily indicative of future results, and it is important to consider various factors when evaluating an investment.
The shares of the company fall under the category of Super Classification and have an overall recommendation of BUY.
This means that the company’s shares are considered high quality and expected to perform well in the market.
It is worth noting that analysts’ recommendations are not guarantees of future performance and should be considered as part of a larger investment strategy.
Doing your own research and due diligence before making any investment decisions is always important.
The shares have great potential moving into the future since CLCT’s portfolio features a diverse range of tenants representing a variety of sectors.
This diversity helps CLCT to capitalise on potential growth in certain industries while mitigating the impact of declining sectors.
In conclusion, the data centre REITs in Singapore offer investors a unique opportunity to reap significant dividends through their expertise and knowledgeable management.
With the right combination of stability, diversification and security, these data centre REITs are a reliable option to provide you with steady returns even in times of market uncertainty.
So when searching for the best data centre REITs in Singapore, look no further – make sure you have the foundational knowledge at hand, assess your financial goals, and prepare to make any long-term investments carefully.
If you’re keen to invest in them, you’ll need to have an account with a broker account in Singapore.
We prefer to use moomoo, which has the lowest fees when investing in the Singapore Exchange (SGX).